Last week, the IRS announced that the Pay or Play Rules under section 4980H of the Code and related reporting requirements under sections 6055 and 6056 of the Code, all introduced to the Code by the 2010 Afforable Care Act, are being postponed for one year. The IRS has followed up that announcement by issuing Notice 2013-45, which provides transition relief for the postponed requirements. Here is what the Notice says:

In General. Both the information reporting and the Pay or Play Rules will be fully effective for 2015. The transition relief through 2014 for the information reporting and the Pay or Play Rules has no effect on the effective date or application of other Affordable Care Act provisions.

Transition Relief For Information Reporting. Section 6055 requires information reporting byinsurers, self-insuring employers, government agencies, and certain other parties that provide health coverage. Section 6056 requires information reporting by applicable large employers with respect to the health coverage offered to their full-time employees.Proposed rules for the information reporting provisions are expected to be published this summer. The proposed rules will reflect the fact that transition relief will be
provided for information reporting under §§ 6055 and 6056 for 2014. Employers, insurers, and other reporting entities are encouraged to voluntarily comply with these information reporting provisions for 2014 (once the information reporting rules have been issued).However, information reporting under §§ 6055 and 6056 will be optional for 2014; accordingly, no penalties will be applied for failure to comply with these information reporting provisions for 2014.

Effect On The Pay Or Play Rules. Under the Play or Pay Rules , an applicable large employer generally must offer affordable, minimum value health coverage to its full-time employees or a penalty may be imposed if one or more of its full-time employees receive a premium tax credit under section 36B of the Code. The section 6056 information reporting is integral to the administration of the Play or Pay Rules. In particular, because an employer typically will not know whether a full-time employee received a premium tax credit, the employer will not have all of the information needed to determine whether must pay a penalty. Accordingly, the employer is not required to calculate the penalty under the Play or Pay Rules or file returns submitting such a payment. Instead, after receiving the information returns filed by applicable large employers under section 6056 and the information about employees claiming the premium tax credit for any given calendar year, the IRS will determine whether any of the employer’s full-time employees received the premium tax credit and, if so, whether a penalty should be imposed. If it determines that a penalty should be imposed, the IRS will contact the employer about the penalty due.

As such, the transition relief from section 6056 information reporting for 2014 is
expected to make it impractical to determine which employers owe a penalty under the Play or Pay rules, so the IRS will not assess any penalty for 2014. However, employers and other affected entities are encouraged to voluntarily comply with the Play or Pay Rules for 2014, and in particular with the information reporting provisions (once the information reporting rules have been issued) and to maintain or expand health coverage in 2014.

Effect On The Premium Tax Credit. Individuals will continue to be eligible for the premium tax credit by enrolling in a qualified health plan through the Affordable Insurance Exchanges if their household income is within a specified range and they are not eligible for other minimum essential coverage, including an eligible employer-sponsored plan that is affordable and provides minimum value.